Promote a Product By Giving It Away

AUTHOR:
Rich Sloan

DATE: 01/21/2008

Name: Jerry Powers Company: SoBe News

Jerry Powers’ Story

Jerry Powers moved to South Florida and rocked the local competition with a dramatic new approach to the city-and-regional magazine business: publish an oversized, slick, sexy title that was heavy on urban sophistication, like a good downtown weekly, and celebrity appeal, like a local People magazine.

Now, not only is Ocean Drive a regional hit, but Jerry is succeeding with the same approach in other markets including Las Vegas and Atlanta. “We changed the industry in Florida, and now we’re doing it elsewhere,” Jerry crows.

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Jerry started as an unlikely publishing impresario. He was a contemporary-art dealer in New York in the early Nineties when his market crashed. On vacation in Miami, he pawed through local magazines and was very unimpressed by their tired dependence on sleepy, suburban-oriented topics.

“They would have lists of the top 10 lawyers or doctors in the area, or landlords,” Jerry says. “But what was happening that was really interesting was inside the city of Miami: fashion, modeling, movies. The whole culture of South Beach was just beginning. I saw that the existing magazines were totally missing the beat.”

And he saw an opening for a new business, launching Ocean Drive. He chose to cover celebrities, fashion, entertainment and night life. “Instead of going with some local doctor or chef on the cover, we had [supermodel] Claudia Schiffer on the cover as photographed by Francesco Scavullo,” Jerry says.

Just as important, Jerry targeted high-end advertisers including four-star hotels, luxury-car dealers and designer boutiques. He also began sponsoring scores of local events to make Ocean Drive and its staff more visible and create word-of-mouth excitement about the publication.

Ocean Drive became an immediate hit, and advertising revenue was quadruple what he projected during its first year of publication in 1992. “Initially, other magazines were very secure and looked at us as something that wasn’t going to last, so they didn’t pay attention to us,” Jerry says.

Three years later, South Florida magazine paid for its nonchalance about Ocean Drive by going out of business, and two years after that the Miami Herald dropped its Sunday magazine. “We take 100% credit for that,” Jerry says.

Since then, Jerry has built Ocean Drive’s overall circulation to more than 65,000 readers. The magazine is so visually interesting that it appears on newsstands nationwide. And now, Jerry is in the midst of taking his iconoclastic approach to city magazines to other markets including Las Vegas and Atlanta, and with partners into Long Island, Los Angeles and Boston.

“And next year,” he promises, “we’re going into Chicago and San Francisco with the same approach.”

Jerry’s Key Move: Giving Away His Product

As important as his editorial and advertising strategy was to the success of Ocean Drive, Jerry says the most important thing he did from a business perspective was to give the publication away.

“I wanted to have an impact on the market immediately,” he says. “And what a brainstorm it turned out to be.”

For many entrepreneurs, the idea of giving away their product is anathema. They don’t mind doing some sampling – but just handing the proud product of their sweat equity to a bunch of strangers for nothing in return? Not interested.

City and regional magazines in Miami and around the country figured things the same way. They relied on subscriptions and newsstand sales to supplement advertising revenues, and to do anything other than charge consumers for the publication, they believed, would cheapen their product.

Jerry investigated the idea of building circulation for his new magazine through the traditional venues of newsstand sales and subscription marketing, but decided that it would be too difficult and slow to generate significant sales volume that way. And because Jerry started out as the new guy on the block, he had little to lose from giving away Ocean Drive.

“We had limited capital, so we had to get people to look at the magazine right away with the first issue,” he explains. “And then advertising clients would know the magazine was being read, and we’d have a shot at a second issue.”

So, Jerry began to drop off bundles of Ocean Drive in doctors’ offices, in high-end malls, at seaside condominium complexes, country clubs, hip night clubs and the lobbies of luxury hotels. “You’ll see us in the Four Seasons and Ritz Hotels, but not even in a Hilton,” he says. “And we don’t distribute to low-end areas or sell into places like 7-Elevens or give away magazines there.”

And it wasn’t just where he placed free copies of his magazine, but how he did it. For one thing, Jerry himself rode the delivery truck and made sure that the publications were physically left with reliable allies such as hotel concierges and boutique owners.

More than that, Jerry used his free-distribution process to underscore and accent the sex appeal of Ocean Drive. He hired models to roller-blade around the city dropping off copies of the book, for example. He sponsored events with upscale advertisers, such as BMW dealerships, where the publication and the Ocean Drive brand were flaunted.

Nowadays, Ocean Drive is popular enough that nearly half its copies are paid for through subscriptions or newsstand sales. And Jerry just keeps on rolling out his formula in other cities.

“Whether it’s Atlanta or Boston, there is that big element of café society that’s interested in our magazines,” Jerry says. “They just like to sit and drink coffee and look at pretty people and shop.”

It cuts against the grain to think that customers can end up valuing something so highly that at first they could get for free. But Jerry has proven with SoBe News how offering a product or service for free can evolve into millions in revenue.

Jerry’s Bonus Insight

Nothing creates public interest like celebrities in this People-crazed culture, and so Jerry applies that truth to his business ventures as well as to the editorial content of his magazines.

In a market where Hispanic entertainers are huge local celebrities, for example, Jerry has launched a high-profile partnership with singer Gloria Estafan and her husband to publish Ocean Drive en Espanol.

ABOUT THE AUTHOR:

Rich Sloan

Rich Sloan is chief startupologist and co-founder of StartupNation and host of StartupNation podcasts. He is also co-author of the acclaimed how-to book, StartupNation: America's Leading Entrepreneurial Experts Reveal the Secrets to Building a Blockbuster Business. Rich encourages you to [...]